PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT is entered into as of September 29, 2000 (this
"PLEDGE AGREEMENT") among INTEGRATED DEFENSE TECHNOLOGIES, INC., a Delaware
corporation (the "BORROWER"), IDT HOLDING, L.L.C., a Delaware limited liability
company (the "PARENT"), those Domestic Subsidiaries of the Borrower as may from
time to time become a party hereto (together with the Parent, each a "GUARANTOR"
and collectively the "GUARANTORS"; together with the Borrower and the Parent,
individually a "PLEDGOR" and collectively the "PLEDGORS") and FIRST UNION
NATIONAL BANK, in its capacity as administrative agent (in such capacity, the
"ADMINISTRATIVE AGENT") for the lenders from time to time party to the Credit
Agreement described below (the "LENDERS").
R E C I T A L S:
WHEREAS, pursuant to that certain Credit Agreement dated as of the date
hereof (as amended, modified, extended, renewed or replaced from time to time,
the "CREDIT AGREEMENT") among the Borrower, the Guarantors, the Lenders and the
Administrative Agent, the Lenders have agreed to make Loans and issue or
participate in Letters of Credit upon the terms and subject to the conditions
set forth therein; and
WHEREAS, it is a condition precedent to the effectiveness of the Credit
Agreement and the obligations of the Lenders to make their respective Loans and
to issue Letters of Credit under the Credit Agreement that the Pledgors shall
have executed and delivered this Pledge Agreement to the Administrative Agent
for the ratable benefit of the Lenders.
NOW, THEREFORE, in consideration of these premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. Unless otherwise defined herein, capitalized terms used
herein shall have the meanings ascribed to such terms in the Credit Agreement.
For purposes of this Pledge Agreement, the term "Lender" shall include any
Affiliate of any Lender which has entered into a Hedging Agreement with any
Credit Party.
2. PLEDGE AND GRANT OF SECURITY INTEREST. To secure the prompt payment and
performance in full when due, whether by lapse of time or otherwise, of the
Pledgor Obligations (as defined in Section 3 hereof), each Pledgor hereby
pledges and assigns to the Administrative Agent, for the benefit of the Lenders,
and grants to the Administrative Agent, for the benefit of the Lenders, a
continuing security interest in any and all right, title and interest of such
Pledgor in and to the following, whether now owned or existing or owned,
acquired, or arising hereafter (collectively, the "PLEDGED COLLATERAL"):
(a) PLEDGED CAPITAL STOCK. (i) 100% of the issued and outstanding
Capital Stock owned by such Pledgor of each Domestic Subsidiary set forth
on SCHEDULE 2(a) attached hereto and (ii) 65% (or, if less, the full
amount owned by such Pledgor) of the
issued and outstanding Capital Stock entitled to vote (within
the meaning of Treas. Reg. Section 1.956-2(c)(2)) ("VOTING
EQUITY") and 100% (or, if less, the full amount owned by such Pledgor)
of the issued and outstanding Capital Stock not entitled to vote
(within the meaning of Treas. Reg. Section 1.956-2(c)(2)) ("NON-VOTING
EQUITY") of each Foreign Subsidiary set forth on SCHEDULE 2(a) attached
hereto (collectively, together with the Capital Stock described in
Section 2(b) and 2(c) below, the "PLEDGED CAPITAL STOCK"), including,
but not limited to, the following:
(A) subject to the percentage restrictions described above,
all shares, securities, membership interests or other equity
interests representing a dividend on any of the Pledged Capital
Stock, or representing a distribution or return of capital upon or
in respect of the Pledged Capital Stock, or resulting from a stock
split, revision, reclassification or other exchange therefor, and
any subscriptions, warrants, rights or options issued to the holder
of, or otherwise in respect of, the Pledged Capital Stock; and
(B) without affecting the obligations of the Pledgors under
any provision prohibiting such action hereunder or under the Credit
Agreement, in the event of any consolidation or merger involving the
issuer of any Pledged Capital Stock and in which such issuer is not
the surviving entity, all shares of each class of the Capital Stock
of the successor entity formed by or resulting from such
consolidation or merger.
(b) ADDITIONAL INTERESTS. (i) 100% of the issued and outstanding
Capital Stock owned by such Pledgor of any Person which hereafter becomes
a Domestic Subsidiary and (ii) 65% (or, if less, the full amount owned by
such Pledgor) of the Voting Equity and 100% (or, if less, the full amount
owned by such Pledgor) of the Non-Voting Equity of any Person which
hereafter becomes a Foreign Subsidiary, including, without limitation, the
certificates representing such Capital Stock.
(c) OTHER EQUITY INTERESTS. Subject to the percentage
restrictions described above, any and all other Capital Stock owned
by any Pledgor in any Domestic Subsidiary or any first-tier Foreign
Subsidiary.
(d) PROCEEDS. All proceeds and products of the foregoing,
however and whenever acquired and in whatever form.
Without limiting the generality of the foregoing, it is hereby
specifically understood and agreed that a Pledgor may from time to time
hereafter pledge and deliver additional shares of stock or other interests to
the Administrative Agent as collateral security for the Pledgor Obligations.
Upon such pledge and delivery to the Administrative Agent, such additional
shares of stock or other interests shall be deemed to be part of the Pledged
Collateral of such Pledgor and shall be subject to the terms of this Pledge
Agreement whether or not SCHEDULE 2(a) is amended to refer to such additional
shares.
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3. SECURITY FOR PLEDGOR OBLIGATIONS. The security interest
created hereby in the Pledged Collateral of each Pledgor constitutes
continuing collateral security for all of the following, whether now
existing or hereafter incurred (the "PLEDGOR OBLIGATIONS"):
(a) all Credit Party Obligations; and
(b) All other indebtedness, liabilities and obligations of any kind
or nature, now existing or hereafter arising, owing from any Pledgor to
any Lender or the Administrative Agent, howsoever evidenced, created,
incurred or acquired, whether primary, secondary, direct, contingent, or
joint and several, including, without limitation, all liabilities arising
under any Hedging Agreements and all obligations and liabilities incurred
in connection with collecting and enforcing the Pledgor Obligations.
4. DELIVERY OF THE PLEDGED COLLATERAL. Each Pledgor hereby
agrees that:
(a) CERTIFICATES AND INSTRUMENTS. Each Pledgor shall deliver to the
Administrative Agent (i) simultaneously with or prior to the execution and
delivery of this Pledge Agreement, all certificates representing the
Pledged Capital Stock of such Pledgor and (ii) promptly upon the receipt
thereof by or on behalf of a Pledgor, all other certificates and
instruments constituting Pledged Collateral of a Pledgor. Prior to
delivery to the Administrative Agent, all such certificates and
instruments constituting Pledged Collateral of a Pledgor shall be held in
trust by such Pledgor for the benefit of the Administrative Agent pursuant
hereto. All such certificates shall be delivered in suitable form for
transfer by delivery or shall be accompanied by duly executed instruments
of transfer or assignment in blank, substantially in the form provided in
EXHIBIT 4(a) attached hereto.
(b) ADDITIONAL SECURITIES. If such Pledgor shall receive by virtue
of its being or having been the owner of any Pledged Collateral, any (i)
certificate, including without limitation, any certificate representing a
dividend or distribution in connection with any increase or reduction of
capital, reclassification, merger, consolidation, sale of assets,
combination of shares or membership or equity interests, stock splits,
spin-off or split-off, promissory notes or other instrument; (ii) option
or right, whether as an addition to, substitution for, or an exchange for,
any Pledged Collateral or otherwise; (iii) dividends payable in
securities; or (iv) distributions of securities or other equity interests
in connection with a partial or total liquidation, dissolution or
reduction of capital, capital surplus or paid-in surplus, then such
Pledgor shall receive such stock certificate, instrument, option, right or
distribution in trust for the benefit of the Administrative Agent, shall
segregate it from such Pledgor's other property and shall deliver it
forthwith to the Administrative Agent in the exact form received together
with any necessary endorsement and/or appropriate stock power duly
executed in blank, substantially in the form provided in EXHIBIT 4(a), to
be held by the Administrative Agent as Pledged Collateral and as further
collateral security for the Pledgor Obligations.
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(c) FINANCING STATEMENTS. Each Pledgor shall execute and deliver to
the Administrative Agent such UCC or other applicable financing statements
as may be requested by the Administrative Agent in order to perfect and
protect the security interest created hereby in the Pledged Collateral of
such Pledgor.
5. REPRESENTATIONS AND WARRANTIES. Each Pledgor hereby represents and
warrants to the Administrative Agent, for the benefit of the Lenders, that so
long as any of the Pledgor Obligations remain outstanding or any Credit Document
or Hedging Agreement between any Credit Party and any Lender is in effect or any
Loan or Letter of Credit shall remain outstanding, and until all of the
Commitments shall have been terminated:
(a) AUTHORIZATION OF PLEDGED CAPITAL STOCK. The Pledged Capital
Stock is duly authorized and validly issued, is fully paid and
nonassessable and is not subject to the preemptive rights of any Person.
All other shares of stock or other interests constituting Pledged
Collateral will be duly authorized and validly issued, fully paid and
nonassessable and not subject to the preemptive rights of any Person. The
Pledged Capital Stock consisting of stock of a corporation is fully paid
and nonassessable.
(b) TITLE. Each Pledgor has good and indefeasible title to the
Pledged Collateral of such Pledgor and will at all times be the legal and
beneficial owner of such Pledged Collateral free and clear of any Lien,
other than Permitted Liens. There exists no "adverse claim" within the
meaning of Section 8-102 of the Uniform Commercial Code as in effect in
the State of New York (the "UCC") with respect to the Pledged Capital
Stock of such Pledgor.
(c) EXERCISING OF RIGHTS. The exercise by the
Administrative Agent of its rights and remedies hereunder will not
violate any law or governmental regulation or any material
contractual restriction binding on or affecting a Pledgor or any of
its property.
(d) PLEDGOR'S AUTHORITY. No authorization, approval or action by,
and no notice or filing with any Governmental Authority, the issuer of any
Pledged Capital Stock or third party is required either (i) for the pledge
made by a Pledgor or for the granting of the security interest by a
Pledgor pursuant to this Pledge Agreement or (ii) for the exercise by the
Administrative Agent or the Lenders of their rights and remedies hereunder
(except as may be required by laws affecting the offering and sale of
securities).
(e) SECURITY INTEREST/PRIORITY. This Pledge Agreement creates a
valid security interest in favor of the Administrative Agent, for the
benefit of the Lenders, in the Pledged Collateral. The taking possession
by the Administrative Agent of any certificates representing Pledged
Capital Stock and all other certificates and instruments constituting
Pledged Collateral will perfect and establish the first priority of the
Administrative Agent's security interest in such Pledged Capital Stock and
such certificates and instruments. Upon obtaining control (as defined in
Section 8-106 of the UCC) of any Pledged Capital Stock consisting of
uncertificated securities or securities entitlements
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pursuant to a control agreement between the Administrative Agent and
the issuer of such uncertificated securities or the securities
intermediary, as applicable, or upon filing financing statements in the
appropriate jurisdictions, the Administrative Agent will acquire a
first priority, perfected security interest in such Pledged Capital
Stock. Except as set forth in this Section 5(e), no action is necessary
to perfect or otherwise protect such security interest.
(f) NO OTHER CAPITAL STOCK. Except as set forth on SCHEDULE
2(a) attached hereto, no Pledgor owns any Capital Stock of any
Person.
(g) PARTNERSHIP AND LIMITED LIABILITY COMPANY INTERESTS. Except as
previously disclosed to the Administrative Agent, none of the Pledged
Capital Stock consisting of partnership or limited liability company
interests (i) is dealt in or traded on a securities exchange or in a
securities market, (ii) by its terms expressly provides that it is a
security governed by Article 8 of the UCC, (iii) is an investment company
security, (iv) is held in a securities account or (v) constitutes a
"security" or a "financial asset" as such terms are defined in Article 8
of the UCC.
6. COVENANTS. Each Pledgor hereby covenants that so long as any of the
Pledgor Obligations remain outstanding or any Credit Document or Hedging
Agreement between any Credit Party and any Lender is in effect or any Loan or
Letter of Credit shall remain outstanding, and until all of the Commitments
shall have been terminated, such Pledgor shall:
(a) BOOKS AND RECORDS. Xxxx its books and records (and shall cause
the issuer of the Pledged Capital Stock of such Pledgor to xxxx its books
and records) to reflect the security interest granted to the
Administrative Agent, for the benefit of the Lenders, pursuant to this
Pledge Agreement.
(b) DEFENSE OF TITLE. Warrant and defend title to and ownership of
the Pledged Collateral of such Pledgor at its own expense against the
claims and demands of all other parties claiming an interest therein, keep
the Pledged Collateral free from all Liens, other than Permitted Liens,
and not sell, exchange, transfer, assign, lease or otherwise dispose of
Pledged Collateral of such Pledgor or any interest therein, except as
permitted under the Credit Agreement and the other Credit Documents.
(c) FURTHER ASSURANCES. Promptly execute and deliver at its expense
all further instruments and documents and take all further action that may
be necessary and desirable or that the Administrative Agent may reasonably
request in order to (i) perfect and protect the security interest created
hereby in the Pledged Collateral of such Pledgor (including, without
limitation, execution and delivery of one or more control agreements
acceptable to the Administrative Agent, execution and filing of UCC
financing statements and any and all other actions necessary to satisfy
the Administrative Agent that the Administrative Agent has obtained a
first priority perfected security interest in all Pledged Capital Stock);
(ii) enable the Administrative Agent to exercise and enforce its rights
and remedies hereunder in respect of the Pledged Collateral of such
Pledgor; and (iii)
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otherwise effect the purposes of this Pledge Agreement, including,
without limitation and if requested by the Administrative Agent,
delivering to the Administrative Agent irrevocable proxies in respect
of the Pledged Collateral of such Pledgor.
(d) AMENDMENTS. Not make or consent to any amendment or other
modification or waiver with respect to any of the Pledged Collateral of
such Pledgor or enter into any agreement or allow to exist any restriction
with respect to any of the Pledged Collateral of such Pledgor other than
pursuant hereto or as may be permitted under the Credit Agreement.
(e) COMPLIANCE WITH SECURITIES LAWS. File all reports and other
information now or hereafter required to be filed by such Pledgor with the
United States Securities and Exchange Commission and any other state,
federal or foreign agency in connection with the ownership of the Pledged
Collateral of such Pledgor.
(f) ISSUANCE OR ACQUISITION OF CAPITAL STOCK. Not without executing
and delivering, or causing to be executed and delivered, to the
Administrative Agent such agreements, documents and instruments as the
Administrative Agent may require, issue or acquire any Capital Stock
consisting of an interest in a partnership or a limited liability company
that (i) is dealt in or traded on a securities exchange or in a securities
market, (ii) by its terms expressly provides that it is a security
governed by Article 8 of the UCC, (iii) is an investment company security,
(iv) is held in a securities account or (v) constitutes a "security" or a
"financial asset" as such terms are defined in Article 8 of the UCC.
7. PERFORMANCE OF OBLIGATIONS; ADVANCES BY ADMINISTRATIVE AGENT. On
failure of any Pledgor to perform any of the covenants and agreements contained
herein, the Administrative Agent may, at its sole option and in its sole
discretion, perform the same, or cause the same to be performed, and in so doing
may expend such sums as the Administrative Agent may reasonably deem advisable
in the performance thereof, including, without limitation, the payment of any
insurance premiums, the payment of any taxes, a payment to obtain a release of a
Lien or potential Lien, expenditures made in defending against any adverse claim
and all other expenditures which the Administrative Agent or the Lenders may
make for the protection of the security hereof or which the Administrative Agent
or the Lenders may be compelled to make by operation of law. All such sums and
amounts so expended shall be repayable by the Pledgors on a joint and several
basis promptly upon notice thereof and demand therefor, shall constitute
additional Pledgor Obligations and shall bear interest from the date said
amounts are expended at the default rate specified in Section 2.10 of the Credit
Agreement. No such performance of any covenant or agreement by the
Administrative Agent or the Lenders on behalf of any Pledgor, and no such
advance or expenditure therefor, shall relieve the Pledgors of any default under
the terms of this Pledge Agreement, the other Credit Documents or any Hedging
Agreement between any Credit Party and any Lender. The Administrative Agent may
make any payment hereby authorized in accordance with any xxxx, statement or
estimate procured from the appropriate public office or holder of the claim to
be discharged without inquiry into the accuracy of such xxxx, statement or
estimate or into the validity of any tax assessment, sale, forfeiture, tax lien,
title or claim except to the extent such payment is
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being contested in good faith by a Pledgor in appropriate proceedings and
against which adequate reserves are being maintained in accordance with GAAP.
8. EVENTS OF DEFAULT. The occurrence of an event which under the
Credit Agreement would constitute an Event of Default shall be an event of
default hereunder (an "EVENT OF DEFAULT").
9. REMEDIES.
(a) GENERAL REMEDIES. Upon the occurrence of an Event of Default and
during the continuation thereof, the Administrative Agent and the Lenders
shall have, in respect of the Pledged Collateral of any Pledgor, in
addition to the rights and remedies provided herein, in the Credit
Documents, in any Hedging Agreement between any Credit Party and any
Lender or by law, the rights and remedies of a secured party under the UCC
or any other applicable law.
(b) SALE OF PLEDGED COLLATERAL. Upon the occurrence of an Event of
Default and during the continuation thereof, without limiting the
generality of this Section and without notice, the Administrative Agent
may, in its sole discretion, sell or otherwise dispose of or realize upon
the Pledged Collateral, or any part thereof, in one or more parcels, at
public or private sale, at any exchange or broker's board or elsewhere, at
such price or prices and on such other terms as the Administrative Agent
may deem commercially reasonable, for cash, credit or for future delivery
or otherwise in accordance with applicable law. To the extent permitted by
law, any Lender may in such event, bid for the purchase of such
securities. Each Pledgor agrees that, to the extent notice of sale shall
be required by law and has not been waived by such Pledgor, any
requirement of reasonable notice shall be met if notice, specifying the
place of any public sale or the time after which any private sale is to be
made, is personally served on or mailed, postage prepaid, to such Pledgor,
in accordance with the notice provisions of Section 9.2 of the Credit
Agreement at least ten (10) days before the time of such sale. The
Administrative Agent shall not be obligated to make any sale of Pledged
Collateral of such Pledgor regardless of notice of sale having been given.
The Administrative Agent may adjourn any public or private sale from time
to time by announcement at the time and place fixed therefor, and such
sale may, without further notice, be made at the time and place to which
it was so adjourned.
(c) PRIVATE SALE. Upon the occurrence of an Event of Default and
during the continuation thereof, the Pledgors recognize that the
Administrative Agent may deem it impracticable to effect a public sale of
all or any part of the Pledged Collateral and that the Administrative
Agent may, therefore, determine to make one or more private sales of any
such Pledged Collateral to a restricted group of purchasers who will be
obligated to agree, among other things, to acquire such Pledged Collateral
for their own account, for investment and not with a view to the
distribution or resale thereof. Each Pledgor acknowledges that any such
private sale may be at prices and on terms less favorable to the seller
than the prices and other terms which might have been obtained at a public
sale
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and, notwithstanding the foregoing, agrees that such private sale shall
be deemed to have been made in a commercially reasonable manner and
that the Administrative Agent shall have no obligation to delay sale of
any such Pledged Collateral for the period of time necessary to permit
the issuer of such Pledged Collateral to register such Pledged
Collateral for public sale under the Securities Act of 1933, as
amended. Each Pledgor further acknowledges and agrees that any offer to
sell such securities which has been (i) publicly advertised on a bona
fide basis in a newspaper or other publication of general circulation
in the financial community of New York, New York (to the extent that
such offer may be advertised without prior registration under the
Securities Act of 1933, as amended), or (ii) made privately in the
manner described above shall be deemed to involve a "public sale" under
the UCC, notwithstanding that such sale may not constitute a "public
offering" under the Securities Act of 1933, as amended.
(d) RETENTION OF PLEDGED COLLATERAL. In addition to the rights and
remedies hereunder, upon the occurrence of an Event of Default and during
the continuation thereof, the Administrative Agent may, after providing
the notices required by Section 9-505(2) of the UCC or otherwise complying
with the requirements of applicable law of the relevant jurisdiction,
retain all or any portion of the Pledged Collateral in satisfaction of the
Pledgor Obligations. Unless and until the Administrative Agent shall have
provided such notices, however, the Administrative Agent shall not be
deemed to have retained any Pledged Collateral in satisfaction of any
Pledgor Obligations for any reason.
(e) DEFICIENCY. In the event that the proceeds of any sale,
collection or realization are insufficient to pay all amounts to which the
Administrative Agent or the Lenders are legally entitled, the Pledgors
shall be jointly and severally liable for the deficiency, together with
interest thereon at the default rate specified in Section 2.10 of the
Credit Agreement, together with the costs of collection and the reasonable
fees of any attorneys employed by the Administrative Agent to collect such
deficiency. Any surplus remaining after the full payment and satisfaction
of the Pledgor Obligations shall be returned to the Pledgors or to
whomsoever a court of competent jurisdiction shall determine to be
entitled thereto.
10. RIGHTS OF THE ADMINISTRATIVE AGENT.
(a) POWER OF ATTORNEY. In addition to other powers of attorney
contained herein, each Pledgor hereby designates and appoints the
Administrative Agent, on behalf of the Lenders, and each of its designees
or agents as attorney-in-fact of such Pledgor, irrevocably and with power
of substitution, with authority to take any or all of the following
actions upon the occurrence and during the continuation of an Event of
Default:
(i) to demand, collect, settle, compromise, adjust and give
discharges and releases concerning the Pledged Collateral of such
Pledgor, all as the Administrative Agent may reasonably determine;
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(ii) to commence and prosecute any actions at any court for
the purposes of collecting any of the Pledged Collateral of such
Pledgor and enforcing any other right in respect thereof;
(iii) to defend, settle, adjust or compromise any action, suit
or proceeding brought and, in connection therewith, give such
discharge or release as the Administrative Agent may deem reasonably
appropriate;
(iv) to pay or discharge taxes, liens, security interests, or
other encumbrances levied or placed on or threatened against the
Pledged Collateral of such Pledgor;
(v) to direct any parties liable for any payment under any of
the Pledged Collateral to make payment of any and all monies due and
to become due thereunder directly to the Administrative Agent or as
the Administrative Agent shall direct;
(vi) to receive payment of and receipt for any and all monies,
claims, and other amounts due and to become due at any time in
respect of or arising out of any Pledged Collateral of such Pledgor;
(vii) to sign and endorse any drafts, assignments, proxies,
stock powers, verifications, notices and other documents relating to
the Pledged Collateral of such Pledgor;
(viii) to execute and deliver all assignments, conveyances,
statements, financing statements, renewal financing statements,
pledge agreements, affidavits, notices and other agreements,
instruments and documents that the Administrative Agent may
determine necessary in order to perfect and maintain the security
interests and liens granted in this Pledge Agreement and in order to
fully consummate all of the transactions contemplated herein;
(ix) to exchange any of the Pledged Collateral of such Pledgor
or other property upon any merger, consolidation, reorganization,
recapitalization or other readjustment of the issuer thereof and, in
connection therewith, deposit any of the Pledged Collateral of such
Pledgor with any committee, depository, transfer agent, registrar or
other designated agency upon such terms as the Administrative Agent
may determine;
(x) to vote for a shareholder, partner or member resolution,
or to sign an instrument in writing, sanctioning the transfer of any
or all of the Pledged Capital Stock of such Pledgor into the name of
the Administrative Agent or one or more of the Lenders or into the
name of any transferee to whom the Pledged Capital Stock of such
Pledgor or any part thereof may be sold pursuant to Section 9
hereof; and
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(xi) to do and perform all such other acts and things as the
Administrative Agent may deem to be necessary, proper or convenient
in connection with the Pledged Collateral of such Pledgor.
This power of attorney is a power coupled with an interest and shall be
irrevocable (i) for so long as any of the Pledgor Obligations remain
outstanding, any Credit Document or any Hedging Agreement between any
Credit Party and any Lender is in effect or any Loan or Letter of Credit
shall remain outstanding and (ii) until all of the Commitments shall have
been terminated. The Administrative Agent shall be under no duty to
exercise or withhold the exercise of any of the rights, powers, privileges
and options expressly or implicitly granted to the Administrative Agent in
this Pledge Agreement, and shall not be liable for any failure to do so or
any delay in doing so. The Administrative Agent shall not be liable for
any act or omission or for any error of judgment or any mistake of fact or
law in its individual capacity or its capacity as attorney-in-fact except
acts or omissions resulting from its gross negligence or willful
misconduct. This power of attorney is conferred on the Administrative
Agent solely to protect, preserve and realize upon its security interest
in the Pledged Collateral.
(b) ASSIGNMENT BY THE ADMINISTRATIVE AGENT. The Administrative Agent
may from time to time assign the Pledged Collateral and its rights and
obligations hereunder to any successor Administrative Agent appointed in
accordance with Section 9.6 of the Credit Agreement.
(c) THE ADMINISTRATIVE AGENT'S DUTY OF CARE. Other than the exercise
of reasonable care to ensure the safe custody of the Pledged Collateral
while being held by the Administrative Agent hereunder, the Administrative
Agent shall have no duty or liability to preserve rights pertaining
thereto, it being understood and agreed that Pledgors shall be responsible
for preservation of all rights in the Pledged Collateral of such Pledgor,
and the Administrative Agent shall be relieved of all responsibility for
Pledged Collateral upon surrendering it or tendering the surrender of it
to the Pledgors. The Administrative Agent shall be deemed to have
exercised reasonable care in the custody and preservation of the Pledged
Collateral in its possession if such Pledged Collateral is accorded
treatment substantially equal to that which the Administrative Agent
accords its own property, which shall be no less than the treatment
employed by a reasonable and prudent agent in the industry, it being
understood that the Administrative Agent shall not have responsibility for
(i) ascertaining or taking action with respect to calls, conversions,
exchanges, maturities, tenders or other matters relating to any Pledged
Collateral, whether or not the Administrative Agent has or is deemed to
have knowledge of such matters; or (ii) taking any necessary steps to
preserve rights against any parties with respect to any Pledged
Collateral.
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(d) VOTING RIGHTS IN RESPECT OF THE PLEDGED COLLATERAL.
(i) So long as no Event of Default shall have occurred and be
continuing, to the extent permitted by law, each Pledgor may
exercise any and all voting and other consensual rights pertaining
to the Pledged Collateral of such Pledgor or any part thereof for
any purpose not inconsistent with the terms of this Pledge Agreement
or the Credit Agreement; and
(ii) Upon the occurrence and during the continuance of an
Event of Default, all rights of a Pledgor to exercise the voting and
other consensual rights which it would otherwise be entitled to
exercise pursuant to clause (i) of this subsection shall cease and
all such rights shall thereupon become vested in the Administrative
Agent which shall then have the sole right to exercise such voting
and other consensual rights.
(e) DIVIDEND AND DISTRIBUTION RIGHTS IN RESPECT OF THE
PLEDGED COLLATERAL.
(i) So long as no Event of Default shall have occurred and be
continuing and subject to Section 4(b) hereof, each Pledgor may
receive and retain any and all dividends (other than stock or
ownership interest dividends and other dividends constituting
Pledged Collateral which are addressed hereinabove), distributions
or interest paid in respect of the Pledged Collateral to the extent
they are allowed under the Credit Agreement.
(ii) Upon the occurrence and during the continuation of
an Event of Default:
(A) all rights of a Pledgor to receive the dividends,
distributions and interest payments which it would otherwise
be authorized to receive and retain pursuant to clause (i) of
this subsection shall cease and all such rights shall
thereupon be vested in the Administrative Agent which shall
then have the sole right to receive and hold as Pledged
Collateral such dividends, distributions and interest
payments; and
(B) all dividends, distributions and interest payments
which are received by a Pledgor contrary to the provisions of
subclause (A) of this clause shall be received in trust for
the benefit of the Administrative Agent, shall be segregated
from other property or funds of such Pledgor, and shall be
forthwith paid over to the Administrative Agent as Pledged
Collateral in the exact form received, to be held by the
Administrative Agent as Pledged Collateral and as further
collateral security for the Pledgor Obligations.
(f) RELEASE OF PLEDGED COLLATERAL. The Administrative Agent may
release any of the Pledged Collateral from this Pledge Agreement or may
substitute any of the Pledged
11
Collateral for other Pledged Collateral without altering, varying or
diminishing in any way the force, effect, lien, pledge or security
interest of this Pledge Agreement as to any Pledged Collateral not
expressly released or substituted, and this Pledge Agreement shall
continue as a first priority lien on all Pledged Collateral not
expressly released or substituted.
11. APPLICATION OF PROCEEDS. Upon the occurrence and during the
continuation of an Event of Default, any payments in respect of the Pledgor
Obligations and any proceeds of any Pledged Collateral, when received by the
Administrative Agent or any of the Lenders in cash or its equivalent, will be
applied in reduction of the Pledgor Obligations in the order set forth in
Section 2.13(b) of the Credit Agreement, and each Pledgor irrevocably waives the
right to direct the application of such payments and proceeds and acknowledges
and agrees that the Administrative Agent shall have the continuing and exclusive
right to apply and reapply any and all such payments and proceeds in the
Administrative Agent's sole discretion, notwithstanding any entry to the
contrary upon any of its books and records.
12. COSTS OF COUNSEL. If at any time hereafter, whether upon the
occurrence of an Event of Default or not, the Administrative Agent employs
counsel to prepare or consider amendments, waivers or consents with respect to
this Pledge Agreement, or to take action or make a response in or with respect
to any legal or arbitral proceeding relating to this Pledge Agreement or
relating to the Pledged Collateral, or to protect the Pledged Collateral or
exercise any rights or remedies under this Pledge Agreement or with respect to
the Pledged Collateral, then the Pledgors agree to promptly pay upon demand any
and all such reasonable documented costs and expenses of the Administrative
Agent or the Lenders, all of which costs and expenses shall constitute Pledgor
Obligations hereunder.
13. CONTINUING AGREEMENT.
(a) This Pledge Agreement shall be a continuing agreement in every
respect and shall remain in full force and effect so long as any of the
Pledgor Obligations remain outstanding or any Credit Document or any
Hedging Agreement between any Credit Party and any Lender is in effect or
any Loan or Letter of Credit shall remain outstanding, and until all of
the Commitments shall have terminated. Upon such payment and termination,
this Pledge Agreement shall be automatically terminated and the
Administrative Agent and the Lenders shall, upon the request and at the
expense of the Pledgors, forthwith release all of the liens and security
interests granted hereunder and shall execute and deliver all UCC
termination statements and/or other documents reasonably requested by the
Pledgors evidencing such termination. Notwithstanding the foregoing all
releases and indemnities provided hereunder shall survive termination of
this Pledge Agreement.
(b) This Pledge Agreement shall continue to be effective or be
automatically reinstated, as the case may be, if at any time payment, in
whole or in part, of any of the Pledgor Obligations is rescinded or must
otherwise be restored or returned by the Administrative Agent or any
Lender as a preference, fraudulent conveyance or otherwise under any
bankruptcy, insolvency or similar law, all as though such payment had not
been made; PROVIDED, that in the event payment of all or any part of the
Pledgor Obligations is
12
rescinded or must be restored or returned, all reasonable costs and
expenses (including without limitation any reasonable legal fees and
disbursements) incurred by the Administrative Agent or any Lender in
defending and enforcing such reinstatement shall be deemed to be
included as a part of the Pledgor Obligations.
14. AMENDMENTS; WAIVERS; MODIFICATIONS. This Pledge Agreement and
the provisions hereof may not be amended, waived, modified, changed,
discharged or terminated except as set forth in Section 9.1 of the Credit
Agreement.
15. SUCCESSORS IN INTEREST. This Pledge Agreement shall create a
continuing security interest in the Pledged Collateral and shall be binding upon
each Pledgor, its successors and assigns and shall inure, together with the
rights and remedies of the Administrative Agent and the Lenders hereunder, to
the benefit of the Administrative Agent and the Lenders and their successors and
permitted assigns; PROVIDED, HOWEVER, that none of the Pledgors may assign its
rights or delegate its duties hereunder without the prior written consent of
each Lender or the Required Lenders, as required by the Credit Agreement. To the
fullest extent permitted by law, each Pledgor hereby releases the Administrative
Agent and each Lender, and its successors and assigns, from any liability for
any act or omission relating to this Pledge Agreement or the Pledged Collateral,
except for any liability arising from the gross negligence or willful misconduct
of the Administrative Agent, or such Lender, or its officers, employees or
agents.
16. NOTICES. All notices required or permitted to be given under
this Pledge Agreement shall be in conformance with Section 9.2 of the
Credit Agreement.
17. COUNTERPARTS. This Pledge Agreement may be executed in any number of
counterparts, each of which where so executed and delivered shall be an
original, but all of which shall constitute one and the same instrument. It
shall not be necessary in making proof of this Pledge Agreement to produce or
account for more than one such counterpart.
18. HEADINGS. The headings of the sections and subsections hereof
are provided for convenience only and shall not in any way affect the
meaning, construction or interpretation of any provision of this Pledge
Agreement.
19. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL;
VENUE. This Pledge Agreement and the rights and obligations of the parties under
this Pledge Agreement shall be governed by, and construed and interpreted in
accordance with, the law of the State of New York. The provisions of the Credit
Agreement relating to submission to jurisdiction, waiver of jury trial and venue
are hereby incorporated by reference herein, MUTATIS MUTANDIS.
20. SEVERABILITY. If any provision of this Pledge Agreement is determined
to be illegal, invalid or unenforceable, such provision shall be fully severable
and the remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.
13
21. ENTIRETY. This Pledge Agreement, the other Credit Documents and any
Hedging Agreement between any Credit Party and any Lender represent the entire
agreement of the parties hereto and thereto, and supersede all prior agreements
and understandings, oral or written, if any, including any commitment letters or
correspondence relating to this Pledge Agreement, the other Credit Documents,
any such Hedging Agreement or the transactions contemplated herein and therein.
22. SURVIVAL. All representations and warranties of the Pledgors hereunder
shall survive the execution and delivery of this Pledge Agreement, the other
Credit Documents and any Hedging Agreement between any Credit Party and any
Lender, the delivery of the Notes and the making of the Loans and the issuance
of the Letters of Credit under the Credit Agreement.
23. OTHER SECURITY. To the extent that any of the Pledgor Obligations is
now or hereafter secured by property other than the Pledged Collateral
(including, without limitation, real property and other personal property owned
by a Pledgor), or by a guarantee, endorsement or property of any other Person,
then the Administrative Agent and the Lenders shall have the right to proceed
against such other property, guarantee or endorsement upon the occurrence and
during the continuance of any Event of Default, and the Administrative Agent and
the Lenders have the right, in their sole discretion, to determine which rights,
security, liens, security interests or remedies the Administrative Agent and the
Lenders shall at any time pursue, relinquish, subordinate, modify or take with
respect thereto, without in any way modifying or affecting any of them or any of
the Administrative Agent's and the Lenders' rights or the Pledgor Obligations
under this Pledge Agreement, under any other of the Credit Documents or under
any Hedging Agreement between any Credit Party and any Lender.
24. JOINT AND SEVERAL OBLIGATIONS OF PLEDGORS.
(a) Each of the Pledgors is accepting joint and several liability
hereunder in consideration of the financial accommodation to be provided
by the Lenders under the Credit Agreement, for the mutual benefit,
directly and indirectly, of each of the Pledgors and in consideration of
the undertakings of each of the Pledgors to accept joint and several
liability for the obligations of each of them.
(b) Each of the Pledgors, jointly and severally, hereby irrevocably
and unconditionally accepts, not merely as a surety but also as a
co-debtor, joint and several liability with the other Pledgors with
respect to the payment and performance of all of the Pledgor Obligations,
it being the intention of the parties hereto that all the Pledgor
Obligations shall be the joint and several obligations of each of the
Pledgors without preferences or distinction among them.
(c) Notwithstanding any provision to the contrary contained herein
or in any other of the Credit Documents, to the extent the obligations of
a Guarantor shall be adjudicated to be invalid or unenforceable for any
reason (including, without limitation, because of any applicable state or
federal law relating to fraudulent conveyances or transfers) then the
obligations of each Guarantor hereunder shall be limited to the
14
maximum amount that is permissible under applicable law (whether
federal or state and including, without limitation, the Bankruptcy
Code).
[Remainder of Page Intentionally Left Blank]
15
IN WITNESS WHEREOF, each of the parties hereto have caused this Pledge
Agreement to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
BORROWER: INTEGRATED DEFENSE TECHNOLOGIES, INC.
By: /s/ Xxxxxx XxXxxx
---------------------------------
Name:
-------------------------------
Title:
-------------------------------
GUARANTORS: IDT HOLDING, L.L.C.
By: /s/ Xxxxxx XxXxxx
---------------------------------
Name:
-------------------------------
Title:
-------------------------------
SIERRATECH, INC.
By: /s/ Xxxxxx XxXxxx
---------------------------------
Name:
-------------------------------
Title:
-------------------------------
PEI ELECTRONICS, INC.
By: /s/ Xxxxxx XxXxxx
---------------------------------
Name:
-------------------------------
Title:
-------------------------------
TECH-SYM CORPORATION
By: /s/ Xxxxxx XxXxxx
---------------------------------
Name:
-------------------------------
Title:
-------------------------------
METRIC SYSTEMS CORPORATION
By: /s/ Xxxxxx XxXxxx
---------------------------------
Name:
-------------------------------
Title:
-------------------------------
ENTERPRISE ELECTRONICS CORPORATION
By: /s/ Xxxxxx XxXxxx
---------------------------------
Name:
-------------------------------
Title:
-------------------------------
CONTINENTAL ELECTRONICS CORPORATION
By: /s/ Xxxxxx XxXxxx
---------------------------------
Name:
-------------------------------
Title:
-------------------------------
T-S HOLDING CORPORATION
By: /s/ Xxxxxx XxXxxx
---------------------------------
Name:
-------------------------------
Title:
-------------------------------
TECH - SYM MANAGEMENT CORPORATION
By: /s/ Xxxxxx XxXxxx
---------------------------------
Name:
-------------------------------
Title:
-------------------------------
PARATECH CORPORATION
By: /s/ Xxxxxx XxXxxx
---------------------------------
Name:
-------------------------------
Title:
-------------------------------
ADMINISTRATIVE AGENT: FIRST UNION NATIONAL BANK
as Administrative Agent
By:
---------------------------------
Name:
-------------------------------
Title:
-------------------------------
